This evening's members' business debate is on motion S1M-1390, in the name of Mr Brian Monteith, on a Scotch whisky industry opt-out from the European Union directive. I ask members who are not staying for the debate to leave quickly and quietly.
That the Parliament notes with concern the possible impact of the EU's Water Framework Directive on the removal of water from rivers and water courses and its potentially damaging effect on the Scotch whisky industry; recognises that the industry is important to Scotland's economy and the many rural areas where distilleries are located; welcomes the efforts made by representatives of all parties to convince the EU to consider opt-outs for Scottish distilleries, and believes that the Scottish Executive should apply immediately the exemptions from the Directive in order to protect the jobs and livelihoods of those working in the industry.
Before commencing, I declare a recreational interest, as I am a member of the Scotch Malt Whisky Society. Sadly, what I am taking a sip of now is not one of its bottlings.
First, I thank the Parliamentary Bureau for selecting my motion for debate. That came as a surprise—but a welcome surprise all the same. Secondly, I place on the record my thanks to those MSPs who have supported the motion and its predecessor on the same subject.
Members may faint when they hear this, but I am a supporter of the European Union and Britain's membership of it. Pause for astonishment.
My view of what Europe should be may differ from that of other members, but I accept that from time to time regulations, in the form of directives, will be framed and introduced throughout the member states. I argue, however, that one of the reasons for the relatively poor perception of the European Union in the public mind is the apparent joy and ruthlessness with which directives are applied by officials and public servants in this country, which contrasts to the relatively liberal approach taken in other countries. While we have our cheese police, scouring manufacturers for any breach of regulations, it is
I suggest that the member consults Humphrey Errington, from whom he will find out the great cost of the cheese police, or dines at Martins restaurant, whose proprietor will explain the problems.
Over the next 12 years, the European water framework directive, which aims to improve the quantity and quality of water available for consumption, will be applied. My fear is that, if we politicians are not vigilant, the hard-fought concessions that recognise Scotland's unusual position as a water-rich nation will be lost in officious and sanctimonious attitudes from faceless bureaucrats.
I hope that members will tonight be able to voice their concerns about the threats posed to the Scotch whisky industry from the water directive. I also hope that the Scottish Government will recognise that some flexibility is available to it in applying the directive and will opt for as liberal a regime as possible. It is worth repeating that the Scotch whisky industry plays a vital role in the Scottish economy. It is a key generator of wealth and jobs. Many of those jobs are to be found in rural Scotland, which, as we know, is experiencing a widespread crisis. In Mid Scotland and Fife, the region for which I am a list MSP, we have the distilleries of Deanston, Glenturret, Tullibardine, Edradour and Dumgoyne.
The whisky industry provides more than 11,000 jobs directly and supports a further 30,000 with suppliers and support services. It generates more than £2 billion in exports annually, accounting for 12 per cent of Scotland's exports and 20 per cent of the UK's food and drink exports. It is crucial therefore that we debate thoroughly any new regulations or laws that may place an undue burden on the industry.
Article 11.3(e) of the directive requires member states to establish a register of water extractions. I understand that there is no objection to that. It also requires the industry to apply for permission to withdraw water. That may make sense in countries where water is scarce, but it is largely unnecessary in sodden countries such as ours. Indeed, the Commission recognised that and eventually accepted a provision that allows member states to
"exempt from these controls, abstractions or impoundments which have no significant impact on water status".
The European Committee and the Rural
One fear is that a licence fee could rise substantially following the introduction of the directive. In effect, we are talking about what is a Trojan horse for introducing a new tax on water, if for no other reason than to pay for the Scottish Environment Protection Agency or whichever organisation undertakes the monitoring and licensing process. Indeed, the funding of the relevant agency and its powers to carry out the monitoring work are legitimate issues that the Deputy Minister for Environment and Rural Development should expand on. I hope that she will do so in her closing speech.
There are real fears about the impact of the directive. I look forward to hearing whether the minister accepts that the Scottish Government has the authority to exempt the Scotch whisky industry from this unnecessary new burden. My understanding is that it does have that authority; indeed, I would go further and say that there is nothing in the directive that says that whole industries cannot be exempted from the directive. By exemption, I mean that the onus of proof that a distillery should be brought within the scope of the directive should be on the authorities. To operate the directive the other way round, with distilleries having to apply for exemptions and prove that they should be exempt, is to ensure substantial costs to the industry with, at the very least, price rises and possibly the closure or mothballing of distilleries, leading to a loss of jobs.
I remind members who fear that I am being alarmist of some of the unintended consequences of the EU's urban waste water treatment directive, which came into force on 1 January this year. I am sure that some members who are present will be aware of my example, as it involves Islay.
When whisky is distilled, it leaves behind two liquid residues, known as potale and spent lees. Traditionally, those residues have been dispersed into the sea from coastal distilleries without any obvious harmful effect. Because whisky is produced in copper stills and traces of the metal can be found in the seawater, the potale has, since 1 January, been treated or dispersed by immersion into faster-flowing currents.
On Islay, six distilleries are currently in operation. Before the directive came into force, they dispersed their potale into the sea. Fish in the surrounding waters thrived on the nutrients contained in the potale, but that was not enough to prevent SEPA from forcing the distilleries to take
Implementation of that directive may cost one distillery alone £2 million a year, yet research suggests that the interaction between the sea and waste water such as potale results in the copper being condensed and dispersing to no toxic effect.
Examples such as that of the Islay distilleries cause me great concern and make me fear the worst about the latest directive on water. The Government's consultation leaflet ominously talked of "comprehensive controls for everyone", sending a sobering chill down the spine of whisky makers and drinkers throughout Scotland. If there was a serious problem with the whisky industry and water, I believe that controls would already be in place.
Water is probably our most plentiful natural resource and it is not in the interests of distilleries to damage their local water supply. Indeed, distilleries are usually in their present location because of the quality of the local water resource.
The Scottish Parliament can make a difference on this issue and ensure that any legislation that is implemented is appropriate to local conditions in Scotland. Ministers and the Parliament need to proceed with caution and common sense, bearing in mind the potential costs to one of our most successful indigenous industries. I hope that regulations will not be enacted simply for regulations' sake; I hope that ministers will be prepared to stand up for Scotland and ensure that the exemptions are applied in a sensible and unbureaucratic manner.
We have until 17:35 for open debate; there will be no extension tonight. I doubt whether all members who have asked to speak will be able to do so, but the more three-minute speeches we have, the more members will be able to participate.
I will try to observe that.
On behalf of all the members who have stayed in the chamber for the debate, I congratulate Brian Monteith on bringing this issue before the Parliament. He said that he had six distilleries in the area for which he is a list MSP. I represent, as the MSP and MP for Moray, the most
I dispute the figures that Brian Monteith gave. The most recent figures that I have from the Malt Distillers Association is that whisky employs 12,000 people directly and supports another 48,000 indirectly. I agreed with the other figures that he mentioned. The smile could be wiped off the face of Prudence Brown if we did not have the £2 billion pounds of tax revenue that goes to the Treasury.
Not least important to the Scotch whisky industry and our rural economy is tourism. I recommend the Moray whisky trail to everyone. There is a wee deoch-an-doruis at the end of every tour of a distillery; sometimes it is better to go on foot.
This weekend, we are hosting a whisky festival in Moray. Everyone is welcome. I will have the pleasure of speaking, at 10.15 pm on Saturday night, at a Burns supper—in May—at which American and Japanese people who are at the whisky festival will experience real hospitality. A strange thing about Burns suppers is that men are usually looking for a lift home, which is why the reply to the lassies is always the last speech.
This is a serious issue. We joke about our love of the water of life—uisge-beatha—but water is a critical factor for the industry. The secrets of our famous products are as secret as the life of Nessie. No one can reproduce the mystery, but we all recognise that our water is critical to our industry.
The Scottish Parliament must make its voice heard on the water framework directive. It has been made clear that exemptions can be introduced. We would fail in our duty as a Parliament if we did not make our voice heard. We would fail this major industry if we did not register our concerns and give whole-hearted support to the need for exemptions.
We have a water abstraction scheme in Speyside, but we take only 0.09 per cent of the River Spey for inclusion in our secret whisky recipes. It is obvious that we do not need the directive, because whisky has for many years been associated with natural supplies and good-quality sources, with the pH factor guarded. Environmental factors have always been high on the industry's agenda.
My concern is that such a regulatory burden could damage already fragile rural economies. I often hear people say, "We must cut red tape." Let us not add to the red tape by applying the directive to our whisky industry. We have an abundance of water; we do not need the directive.
The Malt Distillers Association and the Scotch Whisky Association have produced constructive approaches to the directive. I hope that the minister, when she responds to the debate, will reply positively to their suggestions.
Article 11.3(e) of the directive states:
"Member States can exempt from these controls, abstractions or impoundments which have no significant impact on water status".
That is the most critical factor in the directive as it impacts on our industry.
"Freedom and Whisky gang thegither".
The Scottish Parliament should be saying that water and freedom, perhaps with a touch of whisky, certainly gang thegither. We should make our voice heard on the need for those exemptions.
I suggest that the Scotch whisky industry should be exempt from the abstraction regulations. As we all know, water is crucial to Scotch whisky, but only a tiny proportion ends up in the bottle—some would say too much. For example, although Speyside has the highest concentration of distilleries in Scotland, the industry takes only 0.09 per cent of the annual flow of the River Spey basin for its whisky. A further 1.3 per cent is borrowed for cooling, but that is returned to the water courses without any deterioration in its quality. Indeed, 90 per cent of the water used by the industry is purely for cooling purposes.
Historically, Scotch whisky distilleries sprung up beside rivers or streams that were good sources of water. The locations were chosen precisely because water was in plentiful supply. Furthermore, the majority of malt distilleries are located in the Highlands and Islands of Scotland where rainfall is among the highest in Europe. Abstraction controls are unnecessary in such water-rich areas, particularly when the quantity drawn by the industry is so small.
The reputation of the Scotch whisky industry is built upon natural ingredients and pure Scottish water. Distilleries have worked in harmony with their water sources for hundreds of years and abstraction has not led to environmental damage. Indeed, the industry has a very good environmental record; its discharges to inland waters and coastal waters are already regulated by discharge consents issued by the Scottish Environment Protection Agency.
Many malt distilleries have also purchased, often at considerable expense, the land containing their
Blanket controls would simply increase regulation, without delivering any real environmental benefit. Many economically fragile communities depend on the Scotch whisky industry and unnecessary regulation would threaten their long-term future. In its Scotch whisky framework, which was published in November 2000, the Scottish Executive pledged to keep regulation to a sensible minimum. As 40,000 jobs depend on the industry, great care should be taken to ensure that regulation is not imposed simply for regulation's sake.
The minister needs to clarify that abstraction controls will not be applied and that, due to their low environmental impact, many distilleries will not be subject to additional controls. We need the industry; we must support it.
Presiding Officer, I will help you by making a fairly short speech.
I am slightly surprised to find that I am the only Labour back bencher present, although I am sure that that does not reflect my fellow back benchers' interest in this subject. On the other hand, members might be slightly surprised that I am here at all, given that there are no distilleries in my constituency.
Being a doctor is a good reason for speaking: whisky is an excellent medicinal that I would thoroughly recommend.
I am speaking because two thirds of the world's whisky is stored in my constituency, which makes Clackmannanshire an area of vast importance to the whisky industry. The industry's survival is important to sometimes slightly fragile economies.
Although the EU abstraction directive is itself good and important, it will create problems if it is not applied sensitively to a number of industries. Instead of repeating other members' specific—and correct—points about, for example, the whisky industry's balance with the environment over hundreds of years, I will raise a general point. We charge SEPA with implementing directives in an often insensitive way.
I was recently involved with the paper industry's discharge of effluent. The problem was not the cleaning of the effluent, but its temperature, which is not allowed to rise by more than a couple of
In the case of whisky production, as in the case of other distilling, our natural advantages may put the industry in Scotland at a competitive advantage without affecting the environment adversely. I would support either exemption from or very sensitive implementation of the directive.
I understand why the European directive may make sense in countries where water is scarce, but in Scotland the problem tends to be an excess of rainfall rather than drought. There is plenty of water in the Highlands. Unfortunately, the Executive seems to think that EU abstraction controls are a fait accompli. I hope that the minister will make it clear that that is not the case. I am sure that she will want to help the Scotch whisky industry by ensuring that it is not hampered by unnecessary and costly European blanket controls that are totally inappropriate for Scotland, where the industry takes only a tiny proportion of the water and has an excellent environmental record that is constantly checked by SEPA.
I invite members to consider how lucky we are to have the Scotch whisky industry. It generates huge revenues for the Exchequer and does a fantastic public relations job for Scotland, abroad and in the tourism industry here. In a country that does not have an over-supply of wealth-generating businesses, especially with the electronics industry looking distinctly wobbly, we should be wholeheartedly helping this age-old part of our heritage to go from strength to strength. Many distilleries are in marginal rural areas of low employment and many of the bottle companies are in urban areas such as Clydebank, where jobs are at a premium.
It infuriates me when people say that Scotch whisky is pollutive. That is rubbish. It is not pollutive. Many distilleries discharge into the River Spey, which is world famous for its salmon, and there is no problem there. Many Aberdeen Angus cattle, which produce the best beef in the world, are fed on draff, a distillery by-product. Brian Monteith is right—the fishermen in Islay have complained to me that the removal of the potale syrup discharge has badly affected fishing areas
In 1909, Lloyd George tried to stop people drinking by increasing tax by 35 per cent. With respect, the question must be asked: why should the Scotch whisky industry continue to be disadvantaged by the personal agenda of a teetotal Welsh Liberal Prime Minister 90 years ago? Only the Conservative party has reduced the duty on Scotch whisky in recent times.
In bars, 27.4 per cent of a measure of whisky is tax, whereas a glass of wine incurs only 19.3 per cent tax and a half pint of beer only 16.6 per cent. What must an Italian or a Spaniard think when he has to pay £12 for a bottle of whisky in Edinburgh although it costs only £5 in Milan or Barcelona? Considering the importance of whisky to Scotland, the Scottish Executive should, at the very least, press for parity of taxation between Scotch whisky and beer.
Tax is no longer used to stop people drinking. Prohibition has never worked. Let us therefore provide some true support for this excellent industry. Let us politely inform the EU that Scotland has no need of its water directive and that, in any event, the Scotch whisky industry should receive a derogation from it. Let all parties say a big slàinte mhòr to the Scotch whisky industry for playing such a major role in Scotland's identity and heritage. Let us remove obstructions from its path and encourage it to prosper.
I cannot compete with my wife in terms of the number of distilleries that are located in my constituency—at least, the ones of which HM Customs and Excise and I have been officially notified—and long may the variety continue. Royal Brackla, Dalwhinnie, Tomatin and Ben Nevis provide some of Scotland's finest whisky, as I found out when I revisited Andy Shand and his staff at Ben Nevis on Friday.
When asked what he thought of the prospect of drinking simply one whisky, Norman MacCaig said that it would be just a provocation. What we are debating is a provocation. I can find no justification whatsoever for the imposition of this system of a register of abstractions on the Scotch whisky industry.
All members from whom we have heard—John Farquhar Munro, Brian Monteith, Jamie Stone, Margaret Ewing and Richard Lochhead—have noted that we have the finest drinks industry in the world. We have heard how it operates and I shall not repeat that. There is no need whatsoever for the regulation and I wonder what on earth we are doing here discussing it.
I wonder why the Executive has not responded more seriously when it has had the opportunity to do so—such as when I asked S1W-14793—and announced that an exemption will be sought. All of us must want to join together to present a united front on this issue. There is no evidence that I am aware of that whisky distilling poses any threat to our water supply. We have seen evidence of that from the Scotch Whisky Association and from the Malt Distillers Association, which have shown us figures such as the fact that the amount of water that is abstracted amounts to one part in 1,000. John Farquhar Munro has pointed out that water that is borrowed is given back. The borrowing of water is, therefore, of no relevance at all, nor is the water temperature, which is well controlled to 1.5 deg C.
Why has the Executive not made its position clear? Could it be that SEPA is imposing a dead hand on this issue? I understand that SEPA, in a letter to the convener of the Transport and the Environment Committee dated 1 May, said that it could see
"no reason why the Scotch Whisky industry should be exempt from the Water Framework Directive's requirement for abstraction controls."
SEPA also said that, at present,
"there is no monitoring of abstractions. SEPA believes that the majority of distilleries do not have a negative impact on the environment. However, anecdotal evidence suggests that around 20 % of distilleries do."
SEPA admits that it has only anecdotal evidence, yet it has formed a conclusion—even though it has no evidence. SEPA is supposed to be a responsible organisation and this Executive is supposed to be against red tape. I hope that the minister will say on what basis SEPA has come up with the ridiculous statement that it can see no reason why the industry should be exempt when I detect that the cross-party mood in this Parliament is that there is no case for burdening the Scotch whisky industry with more costs and regulations. There is no appetite—or thirst—for that whatsoever.
I am a great supporter of the Scotch whisky industry. I have ordered a crate of the new Arran whisky, which will arrive at my house as soon as I have paid the rather large amount of tax on it. If members want to see a truly green and environmentally sensitive industrial operation, they should go to Arran, as the operation there is excellent. I know the difference between my Highland Park and my
I have no problem with the idea of having a derogation for the whisky industry, but it must be based on facts. I have recently consulted the British Geological Survey, which gave me a rough figure for the number of unregistered boreholes in Scotland—between 2,000 and 3,000—some of which may or may not be being used by the whisky industry.
We have to have sound facts on which to base our decisions in Parliament and on which SEPA can make decisions on whether parts of Scotland are being affected by abstraction. We must have a full register of all boreholes, however deep.
I will miss out all of the nice bits at the beginning of my speech, but I will thank Brian Monteith for securing the debate.
We must recognise the good work that was done by the Scottish members of the European Parliament in getting the water directive framed in such a way that it could be applied in a sensitive manner. I do not think that anyone has mentioned that yet. It is important to note the fact that they worked as a cross-party group in a concerted way to represent Scotland's interests.
When talking about the water framework directive, we should bear in mind that the water industry is having to cope with the implications of the Competition Act 1998 and that regulation of water abstraction is quite important in that context. To pick up on what Robin Harper said, there is at present no control on water abstraction. We do not have reliable, comprehensive data on how much water abstraction is happening, where it is happening and how it is affecting—potentially damaging—the environment.
The whisky industry has a good record on the environment, particularly in recent years, and should have nothing to fear from the implementation of the directive. We need to consider carefully whether, given some of the wider issues, a blanket derogation for the whisky industry is the best or only way to ensure that implementation does not damage the industry.
I am sure that we are all agreed on the objective of not doing anything to affect adversely the whisky industry or the communities that it helps sustain, but we should give some thought as to how we achieve that objective. We want to look after the baby but, in the wider context, what
I could not agree with members more about the importance of the whisky industry. The motion relates to the possible impact of the new European Community water framework directive on that industry, and I believe that the key to the directive's successful implementation will be partnership. We want to work with the industry, with other interested parties and, most important, with the Parliament in order to implement it in a way that suits Scottish circumstances, and that is sensitive to the needs of Scottish business and of the Scottish environment.
Before I deal with the detail of the motion, I wish to reiterate the Executive's support for the Scotch whisky industry. Margaret Ewing will hear my statistics now: the industry employs around 10,000 people directly and supports as many as one job in 54 in Scotland; it is responsible for £2 billion of exports every year to more than 200 markets worldwide; and accounts for 20 per cent of all UK food and drink exports.
The Executive is justifiably proud of this unique Scottish industry. That is why, in November last year, we published, jointly with the Scotch Whisky Association, "A Toast to the Future: working together for Scotch Whisky". The document represents a partnership between the Executive and the industry, and is an expression of our shared goals for the future.
The continued availability of an abundance of excellent water is vital to the industry's continued success, and is crucial to its image across the world. The industry has committed itself to protecting the natural environment from which it draws its raw materials, and we in turn have pledged to support Scottish manufacturers in cases where EU policies affect their competitiveness, and to take steps to ensure that, in meeting the requirements of EC legislation, the regulatory burden on our businesses is kept to a minimum. It goes without saying that we will take that approach with the EC water framework directive, consistent with achieving its environmental standards.
The minister has referred—and has done so clearly—to the European aspect. Has she considered the fact that water rights that are already held by distilleries are recorded in the Register of Sasines? Has she or
We are entering a major consultation phase on the implementation of the directive. Such issues will come up and will be considered in the course of that.
The directive came into force on 22 December last year and sets out a new approach to protecting and improving the water environment across the EU. We already have some of the best-quality waters in the whole of Europe. They are a vital resource, not only for whisky manufacturing, but for some of our other important industries, including hydroelectricity generation and agriculture.
The directive will help us take a step forward with how we manage those resources for future generations. It requires us to manage our water environment on the basis of sensible environmental units—river basin districts. A river basin district plan will set out where there are environmental problems and what will be done to tackle them. The directive also requires us to control all human impacts—physical and polluting—on the ecology of our rivers, lochs, estuaries and ground water so that we achieve "good" status within 15 years.
I welcome the Parliament's recognition of the directive's significance for Scotland by scheduling the debate. The Transport and the Environment Committee has also recognised its significance by earmarking it as a topic for inquiry.
True to its name, the directive gives us only a framework. It is up to us to fill in the details. The first step in its implementation will be the transposition of its provisions into Scottish law. Members will have an opportunity to engage fully in that process.
Clearly, in implementing the directive, we have to take account of the environmental objectives of the directive while recognising the possible impact on manufacturers.
Members will have the opportunity to engage in the process because, as we have announced, we intend to transpose the directive through primary legislation, provided that space can be found in the legislative programme. It is important to engage all the interested parties, including the
I will now talk about abstraction controls. There can be no doubt that the water framework directive requires us to introduce comprehensive controls on water abstraction in Scotland. The motion suggests that the Executive should apply for an exemption from those controls for the Scotch whisky industry. I am afraid that there is no scope to do that.
The directive says:
"Member States can exempt from these controls, abstractions ... which have no significant impact on water status".
That requires us to assess individual abstractions to determine whether they are having a negative impact on the environment. Of course, if an abstraction does not threaten the environment, the abstractor will not need to change what they are doing.
No, I will finish this point as it is very important.
A general exemption for a whole industry or a particular geographic area is simply not possible. It goes without saying that, in general, we have more than enough water for everyone's needs in Scotland, but we cannot be complacent.
SEPA advises that over-abstraction by industry and agriculture causes environmental problems in some parts of Scotland at certain times of the year. We have more work to do in assessing and evaluating the impact of water abstraction in Scotland. That work will form the basis of the way in which we implement abstraction controls under the directive. I agree with Robin Harper that that work has to be done. We have to base our action on research and evaluations.
Our aim will be to design a system of abstraction controls that is proportionate to the degree of environmental risk, that takes industry needs into account and delivers the required level of environmental protection. We will consult on the detailed proposals in due course.
The Scotch whisky industry is dependent on the
Implementing the directive will be challenging and we cannot meet these challenges alone. The Executive is committed to working with the industry and other interested parties to ensure that the directive is implemented in a way that delivers the best for Scotland. I am sure that the whisky industry will work with us towards that end. I urge colleagues in the Parliament to do the same.
Meeting closed at 17:45.